The Canadian dollar received strong support amid the energy crisis in Europe and Asia. Fuel prices are rising,and this makes the CAD stronger, especially in comparison with the Australian dollar, which in the second half of the year became weak and vulnerable under the influence of many factors. The downtrend continues.
During the week investors focused on the situation in China. The risk of bankruptcy of China's largest construction company may lead to the paralysis of the entire construction industry, which will lead to a drop in exports of raw materials to China. It also became known that there is a shortage of electricity in China. Many industrial enterprises have already warned about their shutdown for several days, but this may lead to disruptions in the supply of finished products and the demand for raw materials may again decrease. With all these negative factors affecting the Chinese economy, a global economic crisis can begin. Of course, commodity currencies will be the most vulnerable, especially the AUD. Prices for iron ore, which brings significant revenue to Australia, are falling rapidly, and lockdowns in Australia are increasing the pressure on its economy.
In Canada, the focus is on the elections that were held ahead of schedule. The Prime Minister retained his position, but will not be able to form a majority as he wanted. As a result, this event had little effect on the CAD exchange rate, unlike oil prices. The price of oil has been at its peak for 2 years. At the same time, few people dare to justify further price increases, given the perspective of a decrease in demand in China. Nevertheless, we expect a further strengthening of the Canadian dollar against the AUD. On the chart we can see that after the price correction, prices rushed down again. Technical analysis tools indicate the effectiveness of the deals on the trend. Our choice for today are also the deals to SELL.
